Budget session: No budget, but circulars galore for tax payers

Feb 03 2014, 09:48 IST
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The govt will announce clarifications aimed at making life easier for taxpayers — both in the direct and indirect taxes. The govt will announce clarifications aimed at making life easier for taxpayers — both in the direct and indirect taxes.
SummaryThe govt will announce clarifications aimed at making life easier for taxpayers — both in the direct and indirect taxes.

threshold for e-payment to Rs 1 lakh

This is something which has increased work for taxpayers but has to be watched out for nonetheless. Earlier, according to service tax rules, an assessee paying service tax of Rs 10 lakh or more, had to deposit service tax electronically. However, after the clarification, assessees paying Rs 1 lakh or more service tax in the preceding financial year will have to deposit the tax electronically, through internet banking, beginning this month.

Relaxes withholding on service tax component on payments to residents

The Central Board of Direct Taxes (CBDT) has provided a huge breather regarding withholding requirement on service tax component on all payments to residents.

“The board has decided that wherever... the service tax component comprised in the amount payable to a resident is indicated separately, tax shall be deducted at source. on the amount paid/payable without including such service tax component,” says the circular issued on January 13.

The tax department had received several representations seeking clarity on withholding tax. In this regard it had received several representations from tax payers. So basically now the TDS on rent paid, hotel charges, taxi services, among others would be levied after reducing the service tax component. This would ensure benefit of cash flows to service providers while would safeguard consumers from disputes.

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